I HOLD THIS TRUTH TO BE SELF-EVIDENT, THAT A DEBT CRISIS CANNOT BE RESOLVED WITH MORE DEBT

Thursday, September 30, 2010

It Can Be Done: Part II

A few weeks ago I wrote about how fast Portugal developed its renewable energy sources (It Can Be Done, And Quickly) and referenced a NY Times article. Today, another two articles caught my attention.

Canada Produces Strain of Algae for Fuel details how a company set up to produce Omega-3 food supplements in Halifax, Nova Scotia stumbled onto a strain of algae capable of producing up to sixty times more triacylglycerol oil (a biofuel base) than similar micro-organisms.

Ancient Italian Town Has Wind at Its Back goes into how a small mountainous village in the center of Italy installed a few wind turbines and is now a net electricity producer, generating extra income for community purposes.

It is increasingly obvious that green/renewable energy is fast becoming a reality outside the U.S. , which is still stubbornly stuck in an energy Middle Age. It's like Americans refuse to see past their own neck of the woods. They are willfully blinded by the supply of cheap, but vastly inefficient, "timber" from their forest and cannot accept that "trees" are becoming scarcer and dearer in more ways than one.

Let's wake up and look things squarely in the eye: the only way to promote fast development of renewable energy is to make it economically attractive via direct positive and negative incentives (guaranteed prices and taxation). Everything else is wishful thinking and hot political air.

The second article says it well:

At the same time, the costs of renewable energy have been falling rapidly. And as in much of Europe, the lure of alternative power here was sweetened by feed-in tariffs — government guarantees to buy renewable electricity at an attractive set price from any company, city or household that produces it.

In the United States, where electricity is cheap and government policy has favored setting minimum standards for the percentage of energy produced from renewable sources rather than direct economic incentives like Europe’s feed-in tariffs, stimulating alternative energy has been only mildly successful. But in countries where energy from fossil fuels is naturally expensive — or rendered so because of a carbon tax — and there is money to be made, renewable energy quickly starts to flow, even in unlikely places like Tocco.

Many will say that such policies and direct government interventions are not the way America does things, or that it makes no sense to raise energy prices and taxes during a crisis.I strongly disagree. We urgently need to look at alternative energy as a driver of growth, instead of as a drag. As the world's biggest consumer of energy (see chart below), the United States can and should revamp its energy regime.

The sheer size of American energy consumption means that changing the outmoded energy infrastructure will take a long time to accomplish; but that's is a good thing, it's a way to create millions of new jobs, technical know-how and investment spending, i.e. activity that will sustain the real economy for decades.

Notice how the renewable energy articles are ratcheting up to much bigger economies. It is perhaps easy to dismiss developments in tiny Portugal (#37 by GDP) or Denmark (#31). But Italy (#7) and Canada (#10) are the real deal, ladies and gentlemen. If we continue to ignore such news, preferring instead to keep our heads in the sand, we will end up in the "Empires For Recycling" bin of history.

"We urgently need to look at alternative energy as a driver of growth, instead of as a drag. "

I think, with respect to alternative energy, there are a number of imperatives, not the least of which is, especially in the wake of the GOM calamity, the development of fuels that leave the ecology intact. Algae may, in that regard, constitute a way forward.

Growth, however, is another matter, and I argue that if we don't want to find ourselves clawing at the dirt because necessary resources have been either used up or despoiled, we'd better re-think "growth."

I consider myself in equal parts pragmatist and idealist. Certainly not Stalinist, since I believe the Bill of Rights to be one of the cornerstones of civilized society.

Notice I said "society"; individualism, most often preceded by the adjective "rugged", is commonly used to describe Americans and that's admirable - up to a point.

We are well past the era of Go West Young Man, The Great Frontier,etc. yet our discussions are still informed by such vision of the past. It's like we are still subconsciously living in the James Fenimore Cooper era. Proof? It is incredible that the NRA is such a massively popular organization. The right to bear arms? In huge cities? Gimme a break..

America got its first dose of "socialism" with the Great Society of FDR. (And if anyone argues the US is not a better place for it, well..)

American civilized society must move forward again after becoming desperately ill from the overdose of virulent laissez-faire it kept swallowing for years.

And there is no way to do so without consensus built around a democratically elected government which we authorize to act in our best interests.

Aristotle said it thousands of years ago: "He who is unable to live in society, or who has no need because he is sufficient for himself, must be either a beast or a god."

"....Aristotle said it thousands of years ago: "He who is unable to live in society, or who has no need because he is sufficient for himself, must be either a beast or a god."....."

How about both.... Man is beast and god..... Where do you draw the line...? As for the Second Amendment, it follows the First. If we bestow genius to our founders, should we assume that the Second follows the First purely by coincidence, or should we give them the benefit of design. I'm good either way...

"..... American civilized society must move forward again after becoming desperately ill from the overdose of virulent laissez-faire it kept swallowing for years....."

"..... And there is no way to do so without consensus built around a democratically elected government which we authorize to act in our best interests...."

I agree whole heartedly, however, I would remove the word "American" from the first paragraph... Today, we live in a global society and there is no place for exceptionalism. As surely as water seeks it's own level, there will be global parity.... It's all a question of challenging our ethnocentric assumptions. If we can not lead, we must follow, if we can do neither, we will be left behind struggling to overcome the obstructions of our illusions.

After years of experiencing... insidious INSATISFACTION with the "democratic" ideal, I have now scrapped it in favor of the ideal that I always LOVED as a child.It goes as follows : "In Christ there is no East or West, in Him no North or South, but one great fellowship of LOVE throughout the whole wide earth".You will notice that.. the fellowship is of LOVE, and NOT OF JUSTICE, for example, nor is it a fellowship of the.. LAW. (I am NOT for globalism at all at this time.)And Eco ? You MAY think that you are a "reasonable" person (...) but I think that the only REASONABLE "people" I "know" are.. computers.And I certainly don't like "them" very much for it, either...And i don't want to be a computer, nor do I consider it any form of an ideal.. to BE a computer. (Which does not mean that I do not favor.. reason AT SOME TIMES, AND IN ITS PLACE.)My above ideal can be found, NOT IN THE CHURCH, but in the Gospel, where it has always been there... to be found, discovered, AND PUT INTO ACTION.

"I agree whole heartedly, however, I would remove the word "American" from the first paragraph... Today, we live in a global society and there is no place for exceptionalism."

It's been a "global society" for centuries.

Right now, the United States is the "world leader".

The next macrodecision event probably won't happen until 2040-2060.

Unless the great power leadership cycle has ended (unlikely), either the United States will come back for a second round (like the U.K. got two rounds) or someone else will take the position of leader.

About Me

I was educated as a chemical engineer but spent almost my entire career in finance, particularly in money, FX and bond markets. The name stands for Hell-as-IOUs and the picture points to Quixotic endeavors.